Contents

Introduction

In recent years, people have become more aware of the intricate relationship between environment and economics, and the need for their integration, as a means to achieve environmentally sound and sustainable development. The last two decades have witnessed the introduction, both in developed and developing countries, of environmental policies designed to work together with economic policies. However, this approach has been found wanting: environmental policies have largely been viewed as appendages, in which remedial action is taken once economic priorities are implemented, and environmental degradation has taken place. By contrast, sustainable development requires the integration of environment and development at the outset of the decision- making process, so as to align core macroeconomic, energy, transportation, forestry, fisheries, fiscal and other economic strategies with environmental goals. Progress requires the restructuring of conventional economic decision- making, whereby economic analysis and instruments are brought to bear on the formulation and implementation of development planning and decision-making. Consensus is slowly emerging on the need to recast conventional economic assumptions at the national and international level, in both the private and public sectors, so as to integrate environmental and socioeconomic planning towards building sustainability.

At its first session held in 1973, UNEP's Governing Council (GC) stated that two of its main objectives were to

1. "provide, through interdisciplinary study of natural and man-made ecological systems, improved knowledge for an integrated and rational management of the resources of the biosphere, and for safeguarding human well-being as well as ecosystems," and
2. "encourage and support an integrated approach to the planning and management of development, including that of natural resources, so as to take account of environmental consequences, to achieve maximum social, economic and environmental benefits."

It has become increasingly evident that there is a direct relationship between economic development in developing countries and levels of environmental degradation. Furthermore, overwhelming poverty and expanding populations exacerbate the problem of environmental management. Due to an ever-increasing scarcity of resources, choices must be made from a myriad of environmental and developmental activities. In a world of uncertainty, the integration of environment and economics will allow countries to choose projects that aim to maximize net long-term benefits for their populations and achieve environmentally sound and sustainable development. A balance between environmental preservation and economic development must be struck in order to reap the benefits of growth without significant degradation of the natural resource base.

Adverse international economic relations, the economic progress of developing countries, and environmental degradation are also directly related. Prevailing international economic relations in trade, commodity prices, tranSNAtional investment, debt and finance are making it very difficult for most developing countries to allocate the investment resources, or introduce the necessary policy adjustment measures required for sustainable development. In order to enable developing countries to move from economic stagnation to a sustained path of development and growth, adverse international economic relations have to be addressed within the context of sustainable development.

Indeed, one of the key issues which emerged from the Rio Declaration on Environ-ment and Development, as well as from Agenda 21, adopted by the United Nations Conference on Environment and Development (unced), is that environment and economics are closely intertwined, and that the integration of environmental considerations into development planning is essential for the attainment of sustainable development. This emerged as an important policy goal during unced, in which UNEP was requested to work with other un organizations and development assistance institutions in promoting specific aspects of the environment and economics agenda. In Chapter 38 of Agenda 21, governments called upon UNEP to focus on "developing and promoting of techniques such as natural resource accounting and environmental economics." Again in Chapter 38, UNEP was requested to concentrate on the "further development and promotion of the widest possible use of environmental impact assessment, including activities carried out under the auspices of United Nations specialized agencies."

UNEP's GC at its 16th Session decided that particular attention should be given by UNEP to the integration of environment and development in its programmes and in the follow-up actions arising from the decisions of unced. In order to meet the specific challenges expressed in UNEP's GC decisions and to perform the task of integrating environment and economics, UNEP convened a Consultative Meeting on Environment and Economics in Nairobi in February 1992. The Meeting was preceded by a Workshop on Environmental and Natural Resource Accounting.

The group of more than fifty experts representing governments, international, academic and research institutions, and non-governmental organizations produced a set of conclusions and recommendations including a proposed framework for a UNEP Action Programme on Environment and Economics. The proposed framework programme was based on state-of-the-art theory, research and studies, ongoing work in this field, and the UNEP mandate in the field of environmental management.

Based on the recommendations of the Consultative Meeting, the Workshop, and a UNEP policy meeting held from 31 August - 4 September 1992, to review the implications of Agenda 21 on UNEP's programmes and the unced recommendations, a UNEP programme on Environment and Economics was prepared for submission to the GC at its 17th Session for its consideration. UNEP's 17th gc subsequently endorsed the proposed programme on Environment and Economics.

Based on the unced recommendations, which were endorsed by the 46th Session of the General Assembly, and UNEP's GC decisions, UNEP's work in environment and economics includes four main components:

1. Valuation of Environmental Goods and Services,
2. Environment and Natural Resource Accounting (ERA),
3. Economic Instruments, and
4. Environmental Impact Assessment (EIA).

It is UNEP's hope that, as a result of these programmes, decision makers will realize the importance of applying models and concepts of sustainable management and development to economic analysis and policies. Economics based on quantitative analysis provides a tool for the development and application of sustainable natural resource management and accounting, as well as more accurate valuation of the costs and benefits of environmental and natural resources. Economic analysis and instruments can contribute to the design and implementation of sustainable environmental management programmes at the national level and can enhance national cooperation to deal with global and regional environmental and development challenges. Environmental economics can promote sound environmental management by providing the rationale for the negotiation and implementation of international agreements, the valuation of environmental and natural resources, the cost of sustainable management, and the cost of inaction. It can help clarify the scope of additional resources required to enable developing countries to address environmental concerns and to fulfil their obligations under international environmental accords. Furthermore, economics can help identify new sources of funding to address environmental concerns for the implementation of international environmental agreements, and to assist in the transfer of environmentally sound technologies to developing countries and countries in transition to market economies (cits). The development of an economic rationale for environmentally sound decision-making can also provide the basis for a more favorable climate of international economic cooperation conducive to environmental management and sustainable development.

In the following pages, the Environment and Economics Unit (EEU) has attempted to provide a presentation of its mission, its strategy, and a description of each component of the programme, including specific activities recommended by international experts groups. These activities are either underway or are being planned by the EEU in close coordination and consultation with other offices in UNEP and other relevant international organizations and national institutions.

Mission Statement

Promote, in collaboration with other United Nations Organizations, and international and national research and development institutions, the further development and application of integrated environmental and economic analysis, policies and instruments, and to enhance international economic and environmental cooperation for sound environmental management and sustainable development.

Needs

UNEP's mission in this area will be accomplished by addressing the following needs:

The need to assist developing countries and cits, by enhancing their capacities in the use and application of integrated environmental and economic analysis and economic instruments for sound environmental management and sustainable development.

The need to support international efforts in the further development and application of economic instruments, analysis and methodologies for integrating environmental and economic policies.

The need to contribute to international efforts leading to the promotion of international environmental and economic cooperation (including trade, international debt, conditionality of aid, commodity prices, production and consumption patterns, subsidies, and structural adjustment programmes).

The need to develop a collaborative programme and maintain continuous dialogue between UNEP and relevant United Nations Organizations, international and national research institutions in the field of environment and economics and establish a network of international research institutions in this area.

Results

UNEP's environment and economics programme aims at achieving the following results:

Further developed and tested methodologies for the practical use and application of economic instruments, environmental impact assessment, valuation methodologies, and environmental and natural resource accounting as effective tools for integrating environment in development planning and decision-making.

An increased number of developing countries and cits adopting and implementing integrated environmental and socioeconomic development plans.

Enhanced capacity of developing countries and cits so that they can adopt and implement sound environmental management and sustainable development plans and programmes.

Enhanced capacity of developing countries and cits so that they can identify the links between international economic and environmental policies and agreements, and the ways and means to make them mutually supportive of sound environmental management and sustainable development.

An improved international climate of economic and environmental cooperation conducive to the implementation of sound environmental management and sustainable development programmes.

A network of institutions and experts at international and national levels to provide technical assistance to developing countries and cits of direct relevance to these countries' needs.

Strategy

Strategy One: Review Existing and Proposed Research Activities.

The focus of the programme is to review and analyze the experience of developed, developing and transitional countries and to encourage continuous dialogue and contact between physical and social scientists, with regional and international development assistance institutions dealing with environment and economics. A major thrust of the programme is to promote information exchange on existing and proposed research work in environmental economic-related policies and analytical techniques, with special focus on work designed for application in developing countries.

This strategy is intended to

1. develop an on-going dialogue with actual and potential users of integrated environmental economic tools, with particular emphasis on coordinating a developing country approach to the assessment of the appropriateness of such analysis and instruments;
2. focus on major environmental management challenges, including those covered by international environmental agreements, inter alia, to explore how the application of environmental management techniques will help ascertain environmental costs and in turn enable developed and developing countries to fulfil their global environmental responsibilities, and to estimate the costs of making the transition to environmentally sound and sustainable development; and,
3. assist UNEP in the implementation of its programmes, with particular emphasis on regional and sub-regional programmes and international environmental agreements (i.e., Montreal Protocol, Climate Convention, Biodiversity Convention).

In 1993, the EEU initiated the establishment of a database on "who is doing what" in the field of environmental economics. A questionnaire was sent out to close to 120 institutions including un organizations, un Economic Commissions, research centres, universities, selected government ministries, and private sector corporations, to obtain an updated profile of past, current and proposed research and work related to environ-ment and economics. Results helped build a practical, low-cost and accessible database on environment and economics for future reference. UNEP will also serve as a focal point or clearing house of information to countries and institutions on the state-of- the-art and its applications.

Strategy Two: Internal Coordination.

Activities of the Environment and Economics Programme are directly linked to the UNEP Programme, to support and promote UNEP's key programme areas so as to help translate national capacity- building objectives into concrete development policy applications. Regular consultations were and continue to be held between EEU and the various UNEP Units/Programme Activity Centers (Pacs) and Regional Offices with the objective of:

1. ensuring coordination and interaction between the work of EEU and that undertaken by UNEP Units/Pacs and outposted and Regional Offices
2. update the different Units/Pacs in UNEP of EEU activities in the field of environment and economics
3. support and provide input and back up to the work of the other offices in the field of economic analysis and applications.

In-house consultations with the various Units/Pacs and Regional Offices were undertaken during the process of formulation and development of the UNEP Action Programme on Environment and Economics to ensure that the design of the Programme reflects the requirements and expectations of UNEP programmes. This was followed by a round of consultations with various offices in UNEP in December 1992 and a second round of consultations during the first quarter of 1993. These were later followed by working group sessions in 1993/94 to work out the modalities of cooperation with the various Units and Pacs in UNEP and complementarity between EEU and other UNEP programmes. Consultations with various offices in UNEP are viewed as a continuous process which should be maintained to regularly identify areas and modalities of cooperation between the EEU and other UNEP programmes.

Strategy Three: External Coordination.

Given the complexity of issues related to environment and economics, and that the emphasis in implementing the priority activity areas identified in Agenda 21 is through catalyzing and coordinating the use of economic analysis and instruments, a major thrust of UNEP's Environment and Economics Programme is to closely coordinate activities with other un organizations, professional/academic associations, the scientific community, national government agencies, environmental administrations, tranSNAtional corporations, industry, ngos, and trade organizations. This coordination will identify gaps and promote more detailed assessments and operational implications of the use of environmental economic analysis and instruments. Given the extensive work underway by the Organisation for Economic Cooperation and Development (oecd) and the World Bank, as well as by various un organizations [United Nations Commission for Trade and Development, (UNCTAD), United Nations Statistical Division (UNSTAT), United Nations Development Programme (UNDP), etc.], the primary policy goal of the EEU is assessing the appropriateness of various economic analytic tools and market-based approaches for environmental management. The EEU work covers practical assessment, technical cooperation, and recommendations related to economic tools for implementation in developing countries and cits. In addition, the EEU seeks to enhance the role of the Committee of International Development Institutions on the Environment (CIDIE) for promoting the integration of environmental considerations in development planning.

In the process of preparing the UNEP Action Programme on Environment and Economics, UNEP convened a series of meetings in 1992, 1993, and 1994 to solicit expert advice on particular areas that UNEP should focus its activities on in the field of environment and economics. In early 1993, close contact between EEU and relevant institutions were further pursued and preliminary agreements on joint collaborative activities identified. Programmes with UNCTAD, UNSTAT, oecd, World Resources Institute (WRI), the Centre for Social and Economic Research on the Global Environment (CSERGE), and the International Academy of the Environment (IAE), have been worked out to cover joint collaborative efforts of the various elements of the programme.

The EEU maintains an advisory list of leading economists in the field of development economics, and environment and natural resource economics from academia, the private and public sector, and research institutions from developed and developing countries, and cits who assist in the further development and implementation of its Programme on Environment and Economics.

Strategy Four: Capacity-building.

The focus of the programme is to enhance and strengthen the capacity of developing countries and cits to implement environmentally sound and sustainable development programmes, with particular emphasis on institutional development, assessment and monitoring, development planning and policies, environmental legislation, education and training, public awareness, scientific research and studies, and financing. In each of the four core EEU activities -- that is, era, EIA, economic valuation and economic instruments -- the primary focus is on assessing applicability, and promoting the practical use of environmental economic-related tools in the context of national capacity-building. Given the complexity of emerging analyses and applications, economic policies will need to be tailored to meet the specific fiscal, legislative, planning priorities and development needs of developing countries and cits.

To achieve this, the EEU is involved in work leading to the preparation of a conceptual and methodological framework for capacity-building for developing countries and cits. EEU's support focuses on enhancing the capacity of these countries to integrate practical and cost-effective environmental management tools into national development plans and decision-making; consulting with major collaborating organizations on approaches to be adopted for enhancing government capabilities in integrating environmental considerations into development plans and decision-making, in introducing policy reforms, and in the use of environmental economic tools. The EEU ensures that governments are aware of the need to institute necessary measures to integrate environment and development and keep the general public informed about measures proposed for the effective implementation of integrated environmental national plans. EEU, in collaboration with international organizations, professional associations and recognized centres of research in developed and developing countries, and cits, sponsors research, analytical publications, and expert group meetings. In addition, the EEU provides guidance to developing countries and cits in designing and implementing an integrated approach to capacity-building for environmental management and sustainable development. Particular emphasis is given to assist and support developing countries and cits, through national institutions, in the application of economic instruments, environmental valuation, EIA, and ERA.

Specific Activity Breakdown

1. Valuation of Environmental Goods and Services

Agenda 21 Recommendations: Establish a process for focusing on pricing and valuation of environmental goods and services (8.37) (a) to (c).

Background

1. Economic instruments, environmental impact assessments, natural resource accounting, and other policy instruments are tools which could be used to achieve environmental objectives. For such instruments to be efficient and effective, they need to take into account the full social, economic, and environmental costs of drawing on natural resources and environmental goods and services, including those which are considered free (air, water, soil, the ozone layer).
2. Estimating the full social and economic costs of environmental degradation, the value or benefit of its enhancement, and the true costs and benefits of utilizing natural resources is a major challenge. This includes the value of clean air, clean water, fertile soil, watersheds, and forests. For example, in estimating the value of the various environmental services provided by forests, the value of timber that forests can supply, their role as reservoirs of biological diversity, their value as a habitat for indigenous people, plants and animals, the role forests play in water retention and as environmental sinks for co2 and other greenhouse gas emissions, and their cultural, aesthetic and scenic values should be included in the valuation process.
3. Valuation of environmental resources, amenities and services is critical to guiding the allocation of investment resources to meet the environmental management needs for sustainable development, to provide pricing of utilities and services to improve economic efficiency and environmental management and for the integration of environmental and natural resource accounting in national income accounting.

Objective

To contribute to the further development and promotion of the application of methodologies for valuing environmental and natural resources, with particular emphasis on valuing services and quantifying damage incurred through the use of environmental assets including transboundary externalities and non-market services. These should also be applied, as appropriate, in environmental impact assessments, cost-benefit analysis, risk assessment, in environmental and natural resource accounting, and as a basis for the internalization of environmental costs.

Activities

The Consultative Expert Group Meeting held at UNEP Headquarters in August 1994 recommended the following Framework Action Programme for implementation by UNEP:

Training and Education

1. Evaluate the existing short- and long-term capacity-building schemes available to environmental economists in developing countries and cits. Assess the need to elaborate additional training courses and other capacity- building programmes. If a need is identified, investigate the availability of "centres of excellence" and mechanisms for cooperation and networking between developed countries, developing countries, and cits, focusing especially on regional centres.
2. Assist developing countries and cits in preparing educational and training materials on the use of economic valuation for environmental management taking into account social, traditional and cultural considerations and the practicality and effectiveness of the use of such tools in these countries.

Research and Development

1. Develop approaches for the integration of EIA and environmental economic valuation. Design techniques to further quantify the physical information obtained from EIAs and convert this data to economic or other indicators to assist in the decision-making process.
2. Develop approaches which integrate social impacts of development and environmental economic valuation. The often ignored social and cultural impacts of development (e.g. resettlement schemes) can potentially be measured through the use and application of environmental economic techniques.
3. As environmental conservation and anti-pollution policies are not uniformly beneficial, perform an analysis of the social distributional incidence of environmental costs and benefits to identify which groups benefit and which groups lose from these policies.
4. Investigate the appropriateness of applying the existing environmental economic valuation procedures to developing countries and cits; study the underlying assumptions of environmental economic valuation procedures, the workings of markets, the cultural issues in expressing preferences, and the role of valuation, if any, in the context of "sacred" assets.
5. Carry out a comparative evaluation of different valuation and assessment techniques, such as cost-benefit analysis, multi-criteria analysis, and EIA in the developing country and cit context.
6. Develop both theory and case studies in which economic valuation is relevant to the gender issue and how economic value varies by gender.
7. Define an approach by which the potential use of valuation techniques as a participatory mechanism could be developed in developing countries and cits.
8. Examine the feasibility of developing multi-objective valuation techniques aimed at representing social, economic, sustainable development, and ecological perspectives.

Manual

1. Develop a manual, with the aid of experts from developed countries, cits, and developing countries, of economic valuation techniques [i.e., Contingent Valuation Method (CVM), Travel Cost Method (TCM) and Hedonic Pricing Method (HPM)], with particular emphasis on valuing services and damages incurred through the use of environmental assets including transboundary externalities, and non-market services. Special attention should also be given to the development of valuation techniques within the framework of the System of Integrated Environmental and Economic Accounting (SEEA) to ensure compatibility with conventional national accounting.

Case Study Analysis and Surveys

1. Survey and analyze the various procedures that exist for capturing non-market values so that they accrue as real benefits to developing countries and cits, e.g., private sector flows, investment in biodiversity, tradeable permits, and carbon offsets.
2. Undertake case studies in developing countries and cits to examine the extent to which environmental economic valuation is being used, how it has been used, the results obtained from its use, its influence on the decision- making process, the user's perception of valuation procedures, the obstacles to its further use, and lessons for the effective use of valuation methodologies.
3. Undertake country case studies on a particular resource to determine how to implement environmental economic valuation, taking into account the obstacles such case studies may face, without duplicating work being carried out by other organizations, particularly the World Bank, in the areas of water, sanitation, and forests.
4. Carry out case studies of individual sector discount rates in developing countries and cits and compare them to the existing social discount rate.
5. Assist in further development and testing of methodologies for estimating the actual costs and benefits of coastal and marine related activities and of integrated coastal and marine management. This will include methodologies for valuing the negative environmental impacts on coastal and marine ecosystems of land-based pollution resulting from population pressure, increased human activity and of sea level rise as a result of global warming. Also, contribute to efforts leading to the further development and testing of techniques for the valuation of biodiversity, desertification and the estimation of the costs of adapting to climate change, the costs of limiting greenhouse gas emissions, the costs of conservation management, and the cost of inaction.

Networking

1. Create a network of experts and institutions from developed, developing countries, and cits in the field of valuation of environmental and natural resources.

Database

1. Develop integrated information systems by using UNEP's existing physical data on the environment and superimposing socioeconomic data.

Library

1. Translation into other languages and dissemination of documents and material produced by UNEP on environmental economic valuation and other relevant subjects.
2. Collect and evaluate case studies in environmental economic valuation for analysis of lessons learned and development of guidelines for future case studies. Maintain and update a library for these studies for use by practitioners worldwide.

2. Environmental and Natural Resource Accounting (ERA)

Agenda 21 Recommendations: Develop and promote the use of techniques such as natural resource accounting (ERA) and environmental economics (38.22) (c), strengthen-ing international technical cooperation in establishing systems of integrated environmental and economic accounting (SEEA) (in collaboration with the UNSTAT) (8.43) (b) (8.50), and support the utilization of sustainable development indicators in national economic and social planning and decision- making practices (8.44) (a).

Background

1. As a result of increasing environmental awareness over the last few decades, the need to account for the contributions of activities made by all sectors of the economy and their impact on resource depletion and degradation, has become increasingly apparent. Since sustainable development includes social, economic and environmental dimensions, it is essential that national income accounting should reflect the degradation and depletion of natural L resources. As the current system of national accounts (SNA) does not take these considerations into account, various approaches to environmental and resource accounting have been proposed.
2. UNEP has been involved in environmental and natural resource accounting (ERA) since 1983 when it convened a consultative meeting on ERA to ascertain whether environmental accounting could be developed as a public policy tool. This was followed by a series of expert workshops on ERA convened jointly with the World Bank. These have resulted in the definition and development of concepts, and discussions on how those concepts could be incorporated into the existing SNA. With the help of expert group meetings, regional seminars and country projects, the un Statistical Office developed a system of integrated environmental and economic accounting (SEEA) which was elaborated in a handbook. The SEEA attempts to amalgamate and integrate the different approaches in natural resource and environmental accounting in a module presentation.
3. The SEEA Handbook has so far been tested in Papua New Guinea and Mexico. It is currently being tested with UNEP support in Ghana, Colombia and Indonesia. The possibility of testing the methodology in other countries is currently being explored. Other methodologies for environmental and resource accounting such as the one developed by the World Resources Institute has been tested in Indonesia and Costa Rica. Other ERA systems have been designed by some developed countries including France, Japan, Norway, and the Netherlands.
4. Techniques for the application of ERA will continue to undergo further develop- ment and refinement. However, this should not be used as an argument for inaction. ERA can provide a useful instrument for assisting countries to achieve sustainable development. Moreover, the application of ERA should be regarded as an evolutionary process in the development of effective accounting of the relationship between the economy and the environment.
5. Future ERA work should include testing the frameworks, methodologies, and the valuation and depreciation techniques to determine their feasibility, and assess the usefulness and effectiveness of various techniques in different countries. This would be done with a view to encouraging the use of these techniques for the practical purpose of guiding economic and environmental policies and programmes.

Objective

To develop and promote methodologies and approaches that integrate environmental and social dimensions into the national income accounting framework, with a view to provide policy and decision makers with information on the economic significance of environmental and natural resources and the implications of development plans on the depletion and degradation of resources.

Activities

The following is the Framework Action Programme recommended for implementation by UNEP by the group of experts attending the UNEP workshop held at its Headquarters in February 1992:

Training and Education

1. Technical assistance in technology and methods of information systems should focus on developing the capacity to collect, compile, and disseminate environment and natural resource data.

The key elements are:

1. improvement of socioeconomic surveys to collect relevant environmental and natural resource statistics, (eg., households, industrial establishments, and human health),
2. environmental mapping and gis technology,
3. development of statistical series from environmental monitoring. The target institutions are central statistical offices, survey and mapping agencies, and departments of environment.

Workshops

1. The organization of international or regional seminars and workshops on natural resources and integrated environmental economic accounting, based on international methodologies (notably the SNA Handbook on Integrated Environmental and Economic Accounts), with support for developing countries' participation in such seminars or workshops.
2. The promotion and application of methodologies, including data uses for integrated environmental and socioeconomic management and policies, through workshops and seminars at the level of regional commissions.

Research and Development

1. The major scientific focus of research and training activities should be on modeling the dynamic processes of environmental stress and response. Major concerns are the identification of key indicators of sustainable development and ecosystem health and monetary valuation of natural resources. Areas for research funding should include, inter alia, ecosystem modeling and mapping, human health (eg., epidemiological studies), environmental ethics and values, and spatial sampling techniques and methods. Research funding should be directed to universities and research institutes for both basic research and training.
2. The focus is on holistic frameworks and the supporting meta-language of concepts, definitions and classification systems. A major theme is the integration of socioeconomic statistics with biophysical data. The component parts are:
1. stocks and flows of natural resources (NRA),
2. statistics on the state of the environment (SOE) and
3. integrated environmental and economic accounting (eg., SEEA).
3. A methodology for determining and prioritizing ERA information needs for developing countries should be based on the depletion rates of natural resources. Thus, the first step is to identify the environmental assets for which information is urgently required. The second step is to determine which parameters of these assets describe the relationship between human activity and environmental change eg., agricultural practices and soil erosion. This two-step process will assist in ensuring that ERA systems meet the actual and most important needs for information.
4. Guidelines for implementing ERA should be formulated, focusing on the following issues:
1. Demonstration of the utility of ERA in development planning and monitoring sustainable development objectives;
2. Identification of financial, human and technical resources, including data systems, required for ERA;
3. Identification of agencies most suitable for the development and application of ERA;
4. Formulation of modalities for the integration of ERA into the planning process; and
5. Identification of funding sources to support the development of ERA in individual countries.
5. The development and analysis of valuation techniques and their implications for formulating and monitoring policies of sustainable economic growth and development through the use of individual and collective expertise.
6. The use of environmentally-adjusted indicators and aggregates in integrated socioeconomic and environmental development (sustainable economic growth and development) through national pilot projects, workshops, or expert groups.

Natural Resource Accounting Handbook

1. With much recent work having concentrated on the general SEEA approach developed by the United Nations Statistical Office, serious consideration should be given to using the SEEA Handbook as a standard approach to environmental satellite accounting in the SNA. It should be emphasized, however, that this would not exclude the use of other approaches to provide specific information not incorporated in the SEEA and to provide a basis for further revisions of the SEEA.

Case Study Analysis and Surveys

1. Development assistance, especially that of the Multilateral Development Banks (mdbs), should be allocated to national statistical offices in order to build environmental and resource accounts, fostering cooperation between them and natural resource management and research institutions, and supporting case studies and research. Agencies should also increase their own use of such accounts in resource evaluations, analysis and projections.
2. Undertake pilot country case studies on the application of ERA in selected countries in Africa, Asia, Latin America and Central and Eastern Europe.

Database

1. A focal point for information on ERA should be established in UNEP to document the ongoing world-wide experience in ERA. A major function would be to provide information and documentation on ERA on request, and publish a manual detailing existing techniques in ERA (particularly with regard to physical accounting and valuation). This manual would be constantly updated based on the results of ongoing applications and research.
2. Create a database, analyze and disseminate information on ongoing activities and experience on the subject.
3. Data collection in collaboration with other international organizations through the Intersecretariat Working Group on Environmental Data (use of "lead" databases).
4. In recognition of the recommendations of the Intergovernmental Working Group on the Advancement of Environmental Statistics (Arusha, February 1992), the preparation of:
• a glossary of terms of environmental statistics, and
• an inventory of training facilities in environmental statistics and accounting.

3. Economic Instruments

Agenda 21 Recommendations: Improve and/or reorient governmental policies (8.34) (a) & (b), and create an inventory of effective uses of economic instruments and market mechanisms (8.35), and increase understanding of their role (8.36) (a) to (c).

Background

1. Regulation and legislation are necessary but not sufficient tools to bring about better environmental management and sustainable development. Often excessive reliance on them can be wasteful and inefficient in achieving the set environmental objectives. Economic instruments can supplement regulations.
2. The use of economic instruments involves the application of the polluter pays principle and charging for the use of environmental goods and services, particularly those currently considered as free goods. They include taxes, subsidies, user fees, charges, tradeable permits, deposit-refund systems, performance bonds, rebates, etc. They serve in part as incentives to private enterprises and households to take the right action for environmental management.
3. Economic tools can be used also as a means to raise funds for government coffers which can be spent on environmental management programmes.
4. Fiscal policies, prices, and the functioning of market mechanisms have an important role in influencing attitudes and consumption and production patterns. Within an appropriate legislative context, economic and market-based approaches can be used to provide cost-effective solutions, encourage the introduction of environmentally sound technologies, and apply integrated pollution prevention control measures. Economic instruments can be used as tools to integrate the social and environmental costs into economic activities thus reflecting the true value of natural resources and the cost of development programmes.

Objective

To promote the assessment and applicability, particularly in developing countries and cits, of economic instruments to influence attitudes, consumption and production patterns, reduce pollution and promote sound environmental management. Support empirical research and the elaboration of practical guidelines on the use of economic instruments (i.e. taxes, charges, tradeable permits, deposit-refund systems) for environmental management and as a source of funding for environmental management programmes.

Activities

The following is the Framework Action Programme recommended for implementation by UNEP, by the group of experts attending the UNEP consultative meeting held at UNEP Headquarters in August 1994:

Training and Education

1. Promote the notion of environmental adjustment (or ecological restructuring) as an integrative process of social and economic considerations.
2. Assist developing countries and cits to prepare educational and training materials on the use of economic instruments for environmental management taking into account social, traditional, and cultural considerations and the practicality and effectiveness of the use of such tools in these countries.

Workshops

1. Organize, convene and sponsor national and regional seminars and workshops on the use of economic instruments for environmental management. Workshops could also be used to promote communication between finance and environmental ministries, and encourage the involvement of ngos, particularly on the use of environmental economic valuation and the introduction of economic instruments; and bring together economists and ecologists to further the use of economic tools and instruments in other disciplines.

Research and Development

1. Review the performance of economic instruments in terms of distribution, effectiveness, and efficiency, and identify the links between them. Consider- ation should be given to the introduction of economic instruments as one tool among a package of tools including command-and-control as well as local and traditional systems.
2. Undertake analysis on how economic instruments can be introduced in a dynamic and macroeconomic setting. Considerations to be taken into account are the various impacts resulting from the introduction of economic instruments in various sectors and the economy as a whole.
3. Undertake a review and an analysis of the political economy of introducing economic instruments for the management of natural resources in developing countries and countries in transition. UNEP should also examine the environ- mental impacts of structural adjustment programmes in collaboration with the World Bank.
4. Facilitate the development of institutions that issue instruments such as tax-free municipal bonds, in order to build income for the financing of environmental activities.
5. Develop methodologies and approaches for the harmonization of the different environmental economic management instruments and policies introduced in developing countries and cits as tools to aid the decision- making process.
6. Develop an environmental code of ethics to be applied to economic activities such as development planning, trade, and international agreements.

Economic Instruments Manual

1. Develop a manual on strategy and techniques for the introduction of economic instruments for environmental management, include a study of the relationship between legal systems and economic instruments, and a glossary of terminologies for economic analytical tools and policy instruments.

Case Study Analysis and Surveys

1. Undertake case studies and analyses on the use, application, and practical introduction of economic instruments for environmental management in developing countries and cits. Examine cases where they have been used, including e.g. transaction cost, multiple objectives, etc., and the results of simulation attempts. Particular emphasis should be given to case studies on:
1. integrated approaches for incorporating economic instruments into a policy analysis framework;
2. the potential use of tradeable permits and other instruments for transbound- ary externalities;
3. the flow of funds (private, public sector) in the context of their generation, use and distributional benefits;
4. the experience of developing countries in the area of rural development for collection of useful data to aid the design of economic instruments for future work;
5. the impact of economic instruments on the relative competitiveness of countries in international markets;
6. the impact of the use of economic instruments for environmental manage- ment on economic development;
7. the potential use of economic instruments in managing ecological systems that cut across national boundaries;
8. the use of economic instruments for environmental management in the context of incentive and disincentive systems.
9. the implications of agricultural subsidies and other economic policy measures on agricultural development, natural resources management and desertification;
10. the socioeconomic driving forces behind land degradation, with emphasis on market and policy failures; and,
11. the use and application of economic policy measures for the abatement of greenhouse gas emissions including barriers to the introduction of such policies and options for overcoming them.
2. Specific focus of UNEP's work should be made on the introduction of economic instruments to economies undergoing transition and structural adjustment programmes that are taking place in Central and Eastern Europe or in developing countries.

Networking

1. Create a network of experts and institutions from developed, developing countries, and countries in transition in the field of economic instruments for environmental management.

Database

1. Undertake an assessment of data and other information requirements for the introduction of various economic instruments, including needs that arise during the implementation and monitoring stages.

Library

1. Establish a library at UNEP with country case studies on the use and application of economic instruments for environmental management in developing countries and in cits. Analyze and update these studies and develop lessons learned and guidelines for future studies.
2. Translation into other languages and dissemination of documents on economic instruments for environmental management and other relevant subjects.
3. Gathering, disseminating, and networking of information in the field of economic instruments in order to increase awareness about the existence of these tools and support education in developing countries and cits.

4. Environmental Impact Assessment (EIA)

Agenda 21 Recommendations: Further development and promotion of the widest possible use of environmental impact assessments, including activities carried out under the auspices of United Nations specialized agencies (38.22) (i)

Background

1. In recent years, EIA tools have undergone important methodological advances, and are now extensively applied by governments, industry and development institutions. Despite such advances, however, key challenges to EIA remain:
1. EIAs are rarely fully integrated at the earliest stage into policy, programme development and project planning;
2. the need to integrate physical, socioeconomic and environmental assessment of programmes, policies and projects, and
3. the principal objective of EIA to focus on and to be used in promoting sustainable development, and not only as a tool for the minimization of environmental degradation.
2. In the follow-up to UNCED, there is a great need for EIA to focus on helping to set the groundwork for sustainable development, as well as pollution prevention and to minimize environmental degradation. There is a need to translate the principles of sustainability into operational terms. Persistent challenges in integrating EIA include: lack of trained personnel and institutions and indigenous capability, gap between theoretical models and practical, clear, coherent and relevant methodologies that can be applied at the country, sectoral and project- specific level; an absence of relevant baseline environmental and socioeconom- ic data, particularly in developing countries; a gap between EIA procedures applied by donor countries and those applied by recipient countries; a lack of coherence and compatibility within the international donor community and the un system.
3. In practical terms, EIA rarely takes account of broader socioeconomic factors related to economic development programmes and policies, as well as specific projects. Too often, assessments are undertaken as a policy appendage, initiated after core development components of a policy or project have been identified. A major challenge is to incorporate EIA into policy, programme and project design at the earliest planning stage. Reconciling competing physical, economic, ecological, social and other factors in development decision-making remains the key challenge in designing EIA tools towards development sustainability.
4. UNEP's past work in EIA has primarily been confined to providing general guidelines and publications, methodological overviews, emerging techniques, etc. UNEP has, for example, produced over 20 publications addressing EIA; they include: The Economics of Survival: The Role of Cost-Benefit Analysis in Environmental Decision-Making (1981) and Analyzing the Options: Cost- Benefit Analysis in Different Economic Systems. In addition, the Paris Industry and Environment Office, the Regional Office for Asia and the Pacific (roap), the International Register for Potentially Toxic Chemicals, and other UNEP projects have produced EIA guidelines.
5. A major focus of future UNEP work includes the development and promotion of the widest possible use of EIA, including, where appropriate, activities undertaken by United Nations specialized agencies, as well as bilateral and international organizations. Emphasis will also be laid on strengthening national capacities, promoting effective implementation of EIA as a development and planning tool for decision-making, follow-up, including monitoring and assessment, and concentrating on providing practical, clear and concrete methodologies.

Objective

To promote the further development and use of EIA as a practical and cost- effective tool for integrating environment and development in decision-making at the policy, programme, and project level, and enhance the capacities of developing countries and cits in integrating EIA in the development planning process at the three levels.

Activities

The following is the Framework Action Programme recommended for implementation by UNEP, by the group of experts attending the UNEP Consultative meeting held in Paris in October 1993:

Training and Education

1. The preparation of educational and training material, such as EIA modules, and curricula for administrators and decision makers as well as for project analysts at the various levels of education, particularly for institutes of higher education offering degree and other levels of qualification in engineering, management, economics, planning and ecological/environmental sciences. Emphasis is laid on the practical and cost-effective applications of EIA, cba and related analytical tools, drawing upon available case study analyses. In order to achieve this, a survey of training programmes, courses and material identifying what works and what does not will be undertaken. In addition, material will be prepared using input obtained from regional and national workshops.
2. Collaborate with universities and applied research institutions in establishing programmes of instruction and research in the application of EIA, cba, and related analytical tools to ascertain the environmental significance of development policies and programmes, and the socioeconomic significance of environmental change, with a view to informing and guiding the economic and environmental planning process.
3. Initiating efforts leading to cross-sectoral understanding and agreement, regarding the usefulness of introducing and implementing EIA procedures for sound environmental management and national sustainable development, particularly amongst policy and decision makers.
4. Developing a network of trained and knowledgeable government (national and local) and other personnel (ngos, universities, research institutes, parastatals, private sector) who have developed good relationships through repeated participation in capacity-building activities.
5. Creation of one or more "centres of excellence" to provide training and to function as a source of technical expertise and EIA information (reports, guidelines, technical papers, etc.).
6. Enhancing public awareness through media campaigns and training of journalists.

Workshops

1. Organizing national workshops to establish, from the bottom up, the basic framework for a national EIA system and its linkages with other tools and economic instruments for environmental management and sustainable development.
2. Organizing a series of workshops/training courses to develop sectoral capabili- ties in using EIA in the energy sector, water resource development, transport networks, etc.
3. The convening of regional workshops (South East Asia, Eastern and Central Africa, West Africa, Latin America and the Caribbean, Eastern and Central Europe) for EIA practitioners. Participants will be requested to prepare short position papers on EIA effectiveness and suggestions for improvement. The outcome of such workshops will help identify training needs as well as what works and what does not in EIA applications; help improve eia practices; promote South-South and regional cooperation; exchange experiences among developing countries, identify their needs in EIA applications, etc.
4. The convening of workshops in order to prepare recipient countries, particularly those receiving a large percentage of overseas development assistance (ODA), to respond to the changing world of ODA and to promote coherence among developing countries and among cits. Participants will mainly be targeted for ODA counterparts i.e., administrators. Workshops will be carried out jointly with other agencies such as the Development Assistance Committee of the oecd and the Canadian International Development Agency (CIDA). EIA Procedures 1. Undertake a review and analysis of information obtained from relevant institutions, with the aim of
1. identifying differences in methodologies,
2. highlighting different strengths and weaknesses,
3. highlighting specific modes of application,
4. providing recommendations on different EIA applications, related to policy, programme development and project criteria.
5. Prepare an EIA good practices document, addressing critical and emerging issues, based on the analyses of current practices and experience in the application of EIAs. The eia good practices would need to be practical, detailing key elements of good practices in EIA for sustainable development, and taking into account the special needs of developing countries and cits. The EIA good practices will be aimed at policy makers, managers, and the public involved in EIA.
6. Prepare a series of publications to supplement the EIA good practices containing country case studies in developed and developing countries, focusing on clear examples of EIAs that have worked or have not, and that can be duplicated. The publications would show the advantages, failures and weaknesses of EIA and the consequences of not doing eias. The case studies will include a critique and commentary by reviewers. Case studies will focus mainly on developing country experiences. Studies will concentrate on public participation practices in developing countries, and lessons learned from developing country input in EIAs, in terms of local expertise. The publication will be beneficial in providing more assistance, particularly to middle level managers involved in EIA implementation and preparation of reports.
7. Prepare a glossary of terminologies and concepts used in EIA and related methodologies and tools for environmental management and sustainable development to be used by EIA practitioners in developed, developing countries, and cits.
8. Proposing options and modalities for the establishing of EIA procedures pertinent to the socioeconomic, political climate and institutional setup of the country in question, and identification of baseline data required for EIA.
9. Proposing options and modalities for the establishing of procedures for the integration of socioeconomic and physical assessment with EIA procedures.
10. Proposing modalities and approaches for the transformation of EIAs into law, or a regulation under an existing umbrella environmental law.
11. Developing a methodology for public participation in the development and implementation of EIA procedures.

Case Study Analysis and Surveys

1. Undertake a survey in developing countries of existing experience, training facilities, institutional and legal structures of EIA procedures and policies in order to assist in the identification of gaps for the practical and cost-effective application of EIA, including continuous monitoring and follow-up.
2. Undertake a search to find examples where EIA results have been incorporated into cba frameworks and analyze the effectiveness of such integration. Any case study material showing how this has been done effectively could be annexed to the EIA good practices. This work will be supplemented by a programme of study, developed in consultation with the World Bank and other development assistance institutions, aimed at determining the extent to which it is feasible to directly integrate cba with EIA.
3. Undertake case study analysis on the use of EIA in development activities with major environmental impacts at both national and global levels and in regions with major development activities, in close collaboration with international development institutions and specialized agencies of the United Nations system and governments with a view to developing and promoting an environmentally sensitive approach to economic and sectoral policy advice. These could include transboundary effects of programmes and activities, the environmental impacts of trade and trade agreements, structural adjustment programmes and economic reform policy packages, as implemented in a few selected countries.
4. Test and demonstrate, in collaboration with UNDP, a consistent approach to the application of EIA and environmental management procedures in the elaboration and implementation of Country Programmes in a few selected countries, with the intention of making available a set of widely acceptable procedures based on such practical application to users including governments and UNDP Resident Representatives' offices.

Networking

1. Create a network of EIA practitioners, including those involved in eia work in developing countries which will enhance the knowledge and understanding of the use of EIA for environmental management and sustainable development.

Database

1. Establish a database on EIA/cba methodologies and applications and the eia good practices and specific experiences in EIA and cba use for developing countries and cits, and international and national institutions. The database will consist of guidelines and a comparative analysis between them compiled from the coordinated inputs obtained from un organizations, research and academic institutions, multilateral and bilateral development assistance institutions and other international and national organizations. It will also include past experience of EIA and cba applications, how eia and cba are used in decision- making and planning processes and update work in EIA methodologies. This will be complemented with a library on EIA and cba documentation.